Tesla (TSLA) Seen as 'Physical AI' Leader as Mizuho Lifts Price Target

Tesla, Inc. (NASDAQ:TSLA) is one of the 10 AI Stocks Making Waves on Wall Street.  On January 29, Mizuho analyst Vijay Rakesh raised the price target on the stock to $540.00 (from $530.00) while maintaining an “Outperform” rating. The firm sees Tesla as a leader in physical AI despite near-term EV demand headwinds.

Mizuho’s rating follows Tesla’s fourth-quarter earnings, where it reported revenues of $25 billion and earnings per share of $0.50, in line with consensus estimates of $25.1 billion in revenue and $0.45 EPS.

The firm noted how Tesla is slowly pivoting to AI, Software, and Robotaxi as growth of EV demand slows in 2026.

“Slow EV Demand in 2026E (we estimate EV sales up ~5% y/y) as TSLA Focuses on Gradually Pivoting to AI, Software (investing $2B in xAI +ve NVDA, DELL), and Robotaxi.”

The company’s automotive gross margin excluding credits improved to 17.9%, up 250 basis points quarter-over-quarter. This improvement, the firm noted, was driven by better mix and pricing.

Mizuho further added how Tesla has reiterated its timeline for launching its cybercab in the first half of 2026, while noting that Full Self-Driving (FSD) v14 revenues grew quarter-over-quarter.

Looking ahead, the company guided fiscal 2026 capex to $20 billion, up from roughly $9 billion in fiscal 2025. This is as it plans to double GPU capacity in the first half of 2026, expand factories, and target AI5 production in 2027.

Overall, the firm sees Tesla as well-positioned leading physical AI.

“4) AI investment – F26E Capex guided $20B (vs. F25 ~$9B) Doubling GPU capacity in 1H26E, expanding six factories, and AI5 prod. in 2027E. Maintain Outperform, Adjust Ests and PT to $540 (prior $530) as we see TSLA well-positioned leading physical AI with Cybercab/FSD traction, humanoid longer term, offset by near-term demand headwinds.”

Tesla, Inc. (NASDAQ:TSLA) is an automotive and clean energy company that leverages advanced artificial intelligence in its autonomous driving technology and robotics initiatives.

While we acknowledge the potential of TSLA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 30 Stocks That Should Double in 3 Years and 11 Hidden AI Stocks to Buy Right Now.

Disclosure: None. This article is originally published at Insider Monkey.